Operation Malicious Mortgage & Related
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A thread dedicated to the developments of "Operation Malicious Mortgage"
Matthew - are you out there? :-)
FBI Press Release
WASHINGTON – The Department of Justice and Federal Bureau of Investigation (FBI) announced today a national takedown of mortgage fraud schemes, the culmination of substantial coordinated efforts during the last three and a half months to identify, arrest and prosecute mortgage fraud violators through the United States. Operation Malicious Mortgage highlights the strong enforcement response undertaken by the Department of Justice and its law enforcement partners to combat the threat mortgage fraud poses to the U.S. housing industry and worldwide credit markets.
From March 1 to June 18, 2008, Operation Malicious Mortgage resulted in 144 mortgage fraud cases in which 406 defendants were charged. Yesterday, 60 arrests were made in mortgage fraud-related cases in 15 districts. Charges in Operation Malicious Mortgage cases were brought in every region of the United States and in more than 50 judicial districts by U.S. Attorneys' Offices based upon the law enforcement and investigative efforts of participating law enforcement agencies. The FBI estimates that approximately $1 billion in losses were inflicted by the mortgage fraud schemes employed in these cases.....
A thread dedicated to the developments of "Operation Malicious Mortgage"
Matthew - are you out there? :-)
FBI Press Release
WASHINGTON – The Department of Justice and Federal Bureau of Investigation (FBI) announced today a national takedown of mortgage fraud schemes, the culmination of substantial coordinated efforts during the last three and a half months to identify, arrest and prosecute mortgage fraud violators through the United States. Operation Malicious Mortgage highlights the strong enforcement response undertaken by the Department of Justice and its law enforcement partners to combat the threat mortgage fraud poses to the U.S. housing industry and worldwide credit markets.
From March 1 to June 18, 2008, Operation Malicious Mortgage resulted in 144 mortgage fraud cases in which 406 defendants were charged. Yesterday, 60 arrests were made in mortgage fraud-related cases in 15 districts. Charges in Operation Malicious Mortgage cases were brought in every region of the United States and in more than 50 judicial districts by U.S. Attorneys' Offices based upon the law enforcement and investigative efforts of participating law enforcement agencies. The FBI estimates that approximately $1 billion in losses were inflicted by the mortgage fraud schemes employed in these cases.....
Comments
6 from Seattle-area indicted in crackdown on mortgage fraud
Six Seattle-area people have been indicted by a federal grand jury in connection with "Operation Malicious Mortgage," a national takedown of mortgage-fraud schemes that has resulted in more than 400 arrests nationwide and losses estimated at more than $1 billion — nearly $8.4 million in the Seattle case alone.....
Straw Purchasing Operation Indicted
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"Operation Malicious Mortgage" nets three in Portland area
.....In the Portland area, prosecutors highlighted three cases of alleged mortgage fraud, saying the defendants put together 200 or more questionable mortgage deals during the boom years.....
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FBI eyes big business in mortgage fraud probe
Federal investigators are homing in on 19 "large corporations" – including investment banks, credit rating agencies, accounting firms and hedge funds – as part of a broad probe into mortgage fraud.
Robert Mueller, director of the Federal Bureau of Investigation, did not identify the companies on Thursday, but said the majority of the large corporate cases involved accounting fraud, insider trading and failures to disclose – with criminal intent – the proper evaluation of securitised loans and derivatives.....
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All these arrests are for mis-deeds comitted prior to August 2007. I am all for prosecuting people for fraud, it's just that doing so at this late date won't really help the real-estate market much (i.e. since fraud has already decreased substantially).
If you've ever dealt with / worked within a federal government agency, you would know that most times it takes a long time to get anything going.
Prosecutors Build Bear Stearns Case on E-Mails
......On Thursday, Mr. Cioffi and Mr. Tannin surrendered to federal agents at 7 a.m. They were fingerprinted and taken in handcuffs to the federal courthouse in Brooklyn where they were charged with nine counts of securities, mail and wire fraud.
The two men, who were forced out of their jobs last year, are the first senior executives from Wall Street investment banks to face criminal charges stemming from the credit mess, and the investigation by federal prosecutors based in Brooklyn is likely to become a test case of the government's ability to make successful prosecutions of arcane financial transactions.
"This is not about mismanagement of a hedge fund investment strategy," said Mark J. Mershon, the head of the New York office of the Federal Bureau of Investigation, at a news conference Thursday. "It is about premeditated lies to investors and lenders."......
......"We have to be wary of a rush to judgment," said Robert A. Mintz, a former federal prosecutor and a lawyer at McCarter & English. "The question is whether these managers crossed the line from permissible spin to willful misrepresentation."....
.....Despite the highly complex nature of the subprime investments, the government's base claim is simple: Mr. Cioffi and Mr. Tannin, in a desperate bid to keep fretful investors from heading for the exits, deceived investors by not disclosing how badly the two funds were doing.
In an indictment made public Thursday, prosecutors relied heavily on e-mail exchanges between Mr. Cioffi and Mr. Tannin in trying to paint a picture of fear and desperation inside Bear Stearns as the firm grappled with a crisis that would eventually lead to its end.
In a statement, Edward J. Little, a lawyer for Mr. Cioffi, said that the credit market had spread losses throughout Wall Street. "Ralph Cioffi's funds lost money in exactly the same way," Mr. Little said. "Because his funds were the first to lose might make him an easy target, but doesn't mean he did anything wrong."
Susan Brune, a lawyer for Mr. Tannin, said her client had been made a scapegoat for the wider market crisis......
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Different article, more of the same......
Bear Stearns Fund Prosecutors Reveal `Lot of Evidence' of Fraud
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First, a lot of the information comes out after the crash, not during the bubble. It's even likely that if investigators asked for access to emails or other documents of wrong-doing during the boom that they would have had little or no access. However, after the crash, I think it becomes much easier to gather evidence.
True, we would all prefer if misdeeds were punished when they happened. However, if your only real options are that misdeeds go unpunished or that they are punished after "the horse has left the barn", I guess I'll take some punishment over none.
That doesn't seem to be the way our current administration works, unfortunately.
From Calculated Risk
More on Bear Stearns Indictment
If the prosecutors can prove the managers knew certain material facts on a certain date, and then prove the managers told investors materially different facts on a subsequent date - IMO that is powerful evidence of securities fraud.
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The indictment is just the first phase, they guys are going to lawyer up and then come to the table for plea negotiations. He who talks first usually gets the best deal. It will be interesting to see how many others are implicated in the next few months...
Illinois to Sue Countrywide
The Illinois attorney general is suing Countrywide Financial, the troubled mortgage lender, and Angelo R. Mozilo, its chief executive, contending that the company and its executives defrauded borrowers in the state by selling them costly and defective loans that quickly went into foreclosure.....
Feds eye Bear fund dealings with banks: report
NEW YORK (Reuters) - Prosecutors are looking into whether two former Bear Stearns hedge fund managers, who were indicted last week on conspiracy and securities fraud charges for misleading investors, also broke the law in their dealings with banks, BusinessWeek reported on Wednesday.
Investigators are gathering evidence about possibly misleading comments that Ralph Cioffi and Matthew Tannin made to major lending and trading partners, BusinessWeek reported in its online edition, citing people close to the probe.
The report named Bank of America, Barclays, Dresdner Bank, and Merrill Lynch & Co as having dealings with the pair that have attracted the attention of investigators.....
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But I could be wrong. Seriosly.
I just hate SOX with a passion. At the office we call it the "IT full employment act". It is an utter waste of time and money. 'Course, a lot of that money is going into MY pocket, so...
Those nasty Countrywide loan officers held guns at poor unsuspecting borrowers heads until they signed the papers. I seen 'em do it!
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This is BS. I remain unconvinced that most buyers did not understand their mortgage contract. I believe most knew exactly what they were doing in that they were gambling on the sure thing of an ever appreciating real estate market.
California Atty. Gen. Jerry Brown sues Countrywide
The nation's largest mortgage lender, Countrywide Financial, and its founder, Angelo Mozilo, above, are being sued by California and Illinois for allegedly misleading consumers into taking on risky home loans......
.....(California Attorney General Jerry) Brown accused Mozilo and his company of causing thousands of foreclosures by deceptively marketing risky loans to borrowers who didn't understand that their monthly payments would one day "explode."
The suit cited not only sub-prime loans to the riskiest borrowers, but also loans made to borrowers with good credit, including complex adjustable-rate mortgages known as option ARMs as well as home equity lines of credit.
Mozilo and his associates "crafted mortgage instruments that did great harm to individuals and the community, and they persisted in expanding these damaging mortgage instruments over a number of years," Brown said in an interview.
The lawsuit seeks restitution for borrowers who were deceived but doesn't spell out how that would be accomplished, and Brown warned that a quick resolution was unlikely. Countrywide and Bank of America, which is assuming Countrywide's legal liabilities, "have good lawyers," Brown said. "This is the beginning of a long road.".
In addition to Countrywide and Mozilo, Brown's suit names Countrywide President David Sambol as a defendant. The state of Illinois filed a similar suit Wednesday against Countrywide and Mozilo, seeking to rescind loans allegedly made deceptively to borrowers in that state......
.........Also among the suit's allegations:
* Underwriters who confirmed information on mortgage applications were "under intense pressure . . . to process 60 to 70 loans per day, making careful consideration of borrowers' financial circumstances and the suitability of the loan product for them nearly impossible."
* "Countrywide's high-pressure sales environment and compensation system encouraged serial refinancing of Countrywide loans."
* Loan officers overstated how much borrowers earned or "led the borrower into overstating his or her income without explaining the risk of default with a loan he or she could not actually afford."
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If true, then it is reasonable and just for those people to receive some compensation. This in my mind is completely unrelated to the bubble, except that perhaps those clients rushed to get a bad deal for fear of being priced out forever.
RCC, you are correct. Gregoire and company are going after Countrywide. I posted the following in the "News" section of The Tim's blog. You would think it was an election year or something?
State wants to yank Countrywide's license
State regulators are seeking to revoke the license of Countrywide Financial and fine the nation's largest mortgage lender $1 million after its investigation showed it engaged in alleged predatory practices.
"The allegation offers evidence that Countrywide engaged in a pattern to target minority groups and engage in predatory practices," Gov. Chris Gregoire said at a news conference Wednesday, on the same day that Illinois and California sued Countrywide over unfair lending practices.....
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There are more blacks in prison than whites. If that aint racist, I don't know what is.
There are more men in prison than women. If that aint sexist, I don't know what is.
I read an article about a year ago talking about governments accusing mortgage companies of being racist because they were diproprtionately declining loans to minorities. Now that the mortgage companies, thanks to government pressure, gave them all loans, they are being accused of racism because this same group is being disproportionately foreclosed on.
Did anyone stop to think that the declining of loans was justified, not due to race, but rather ability to pay back? And further did nobody notice that statistically these same minorities disproportionately represent the lower income classes (for whatever reason).
Are there more men in prison because the system is sexist, or is it becuase more men commit prison offenses than women?
I have no love for countrywide, but blaming them for this is a little like claiming Hitler ate his dog (he was a vegetarian). That is, lets talk about REAL blame where it belongs but not use quite so broad a brush to destroy our own credibility on unfounded claims.
I am preaching to Christine, btw, not anyone here.
So, a black noncomforming subprime paying a higher rate than a white conforming prime is not news. But a black with a 723 FICO and gross income of $48k a year with 5% down paying a higher rate than a white with 720 FICO, gross income of $49k a year and 3% down is suspicious. If it is proven that Country Wide systematically gouged minority customers, then punitive action should be taken.
None of this has anything to do with men committing more violent crime than women.
I actually did get the point. And I think where the violation is found it most definitely should be prosecuted. My point, however, is that this is often not the case. The point is that, in fact, all things being equal, they WERE treated fairly. But each and every case must stand on it's own.
It seems this is far from an open and shut case however. Which makes sense. What markers need to be there to prove racially motivated discrimination?
That is a very good question. Back in the mid-1960's my parents were trying to rent out our house before we moved (it was in eastern Washington). The Job Corps had just come to town. My parents told me when they went out one day that if anyone called for the house and sounded black, I was to tell them it was already rented. I asked my father why and his response was one I will carry to my grave and very much reflects my opinion today on race relations and government protection: "If a white person rents our house and they turn out to be a deadbeat, we can have them evicted. If a black renter turns out to be a deadbeat, we are stuck with them for much longer and much more work, and could even be sued for racial discrimination".
I have seen this play out throughout my life, most recently with where my wife works. They had a black employee who was actually a very nice person and a friend of my wife. Problem was, she showed up late repeatedly and, on top of that, violated a company policy that everyone knows is a serious "automatic termination" offense. She was terminated. The "racial discrimination" case she brought is going on now.
Several years ago, at a company I worked at, several people were fired for cause, for the exact same reason. One was black. One sued for racial discrimination. Care to wager a bet which one it is.
Yet I do not blame these two or so many of the others I know of that have done it - Anyone in trouble will reach for a lifeline. I blame the system that offered such ridiculous lifelines. It should be MUCH more difficult to prove racial discrimination.
And you will notice a subtle theme in the first case I mentioned that permiates our culture - the overly sensitive "racial discrimination" laws actually take "potential opportunities" away from blacks. That is, we rented to a white family.
Remember "redlining"? It is, of course, based on statistics, and quite illegal.
I wonder if a day will ever come when the government will make it illegal for life insurance companies to charge an 80 year old man more than a 20 year old man, based on actuaries. Is that age discrimination? You bet! Is if fair? Depends on whether you want the insurance industry to continue to exist.